Trademark Searching and Clearance: Don't Endanger Your Brand by Making These Six Major Mistakes

Trademark searching and clearance is the process of gathering and assessing information to evaluate a proposed trademark’s availability and protectability. It is also a critical part of business risk management. Failing to search, or not searching properly, can have drastic consequences, including having to rebrand or being sued for trademark infringement.

A successful infringement claim can lead to an injunction that stops a new product launch or advertising campaign in its tracks, and can result in significant money damages, including treble damages if willful infringement is found. Even if a company ultimately prevails in the litigation, the defense costs can be enormous, including attorneys’ fees, expert fees and survey costs. The time spent by business personnel in depositions and other discovery matters can also be a drain on productivity.

While proper trademark searching and clearance can be complex and sophisticated, certain common mistakes can be easily avoided.

MISTAKE #1: NOT CONSULTING A TRADEMARK ATTORNEY

The trademark search process is complicated and lined with many potential pitfalls. A company can avoid many of these mistakes by consulting a trademark attorney experienced in searching and clearance. Mistakes are more likely when searching and clearance is conducted by non-trademark lawyers or by business personnel. A modest amount of money invested up front to retain an experienced trademark attorney can help avoid significant costs, including from infringement and related claims.

MISTAKE #2: NOT CONDUCTING A PROPER SEARCH

Many companies and individuals face trademark infringement claims litigation that could have been avoided through a small initial expenditure to conduct a trademark search before launching their new business, product or service. Proper searching can identify third-party marks that pose potential risks, allowing the company to either:

• Select a different name.
• Pursue further clearance steps, for example seeking consent from the owner of conflicting rights.

Proper trademark searching may also help defend against allegations of willful infringement while, conversely, failing to search may be used as evidence of willfulness.

Although the nature and extent of searching varies depending on the circumstances, proper trademark searching typically involves:

• Preliminary searches
• Full Trademark Searches

PRELIMINARY SEARCHES

A preliminary search typically involves searching the US Patent and Trademark Office (USPTO) database and the internet for direct conflicts. These are are typically existing federal applications or registrations for, or common law uses of, identical marks for identical or closely related products or services. Identifying a direct conflict often means that the proposed mark is:

• Not available.
• Available only if further clearance steps are undertaken (for example, a purchase of conflicting rights), which may not be realistic depending on time and budget constraints.

While useful for identifying third-party marks that are direct conflicts with a proposed mark, a USPTO database search is generally insufficient to clear a new mark for use or registration because of its limitations, including that:

• The USPTO database only contains federal trademark applications and registrations.
• The USPTO database does not cover common law marks.
• Depending on how it is structured, a USPTO search may not disclose applications or registrations for marks that, while not identical to the proposed trademark, may be sufficiently similar to cause consumer confusion.

While an internet search may aid in identifying direct conflicts that may not be disclosed by a USPTO database search, its scope is limited and generally not sufficient for clearing a mark.

FULL TRADEMARK SEARCHES

Given the limitations of preliminary searches, a full trademark search conducted by a commercial trademark search vendor is generally necessary for reliably clearing a new mark or new use of an existing mark.

A full search typically includes a search of:

• USPTO application and registration records.
• State trademark registrations.
• Common law and company name databases.
• Domain name databases.
• Websites.

The cost of a full search varies depending on many factors including the desired turnaround time, but typically ranges from $800 to $1,500, plus attorney’s fees for reviewing the results and drafting an opinion letter. The cost, however, is minimal when compared to the potential costs associated with defending against a trademark infringement or unfair competition suit.

MISTAKE #3: IGNORING CANCELLED REGISTRATIONS AND ABANDONED APPLICATIONS

Another common mistake is assuming that trademarks that are the subject of cancelled registrations or abandoned applications do not pose an appreciable risk. Even if a registration is cancelled or an application is abandoned, the trademark may still be in use and the owner may still have common law rights in the mark. Ignoring those registrations and applications can be a very costly mistake if the mark is in use, or if the use stoppage is temporary so that the trademark itself has not been legally abandoned.

Trademark registrations may be cancelled and applications abandoned for many reasons unrelated to the mark’s use status, including:

• Docketing failures.
• A lack of resources for mark maintenance.
• Failure to overcome USPTO office actions.

If a canceled registration or abandoned application is for a mark similar to the proposed mark and is for related goods or services, it is typically advisable to conduct a further investigation to determine:

• Whether the mark is in use.
• If the mark is not in use:
  • when the use stopped; and
  • whether there are any plans to resume use.

Companies should pay particular attention to abandoned use-based applications and cancelled use-based registrations since marks covered by these were in use at some point. Abandoned intent-to-use applications may present a lower risk, although the applicant still may have started using the mark.

MISTAKE #4: FAILING TO CONDUCT AN INVESTIGATION

Even a full trademark search may not disclose any details about the actual use of a trademark in the marketplace. Determining the nature and extent of a potentially conflicting mark’s use in the marketplace is essential for assessing likelihood of confusion and the level of risk. Likelihood of confusion is the touchstone of trademark infringement and unfair competition. The various federal circuit courts of appeal have adopted multi-factor tests for assessing likelihood of confusion. These tests vary by federal circuit but generally examine similar factors.

To perform a thorough analysis of these factors as applied to a potentially problematic third-party trademark disclosed in a search, a company must investigate the nature and extent of the third-party trademark’s use. Generally, it is critical to assess:

• How long the third-party trademark has been in use.
• The commercial strength of the trademark.
• The goods or services for which the trademark is used.
• The trade channels for the goods or services.
• The price points of the goods or services.
• The types of consumers that purchase the goods or services.
• The size of the third party and the extent of their resources.
• The third-party’s history of trademark enforcement.

The answers to these questions provide information for conducting an informed likelihood of confusion and risk analysis, as well as developing a clearance strategy. A clearance strategy may include:

• Seeking to purchase the conflicting mark.
• Pursuing a consent, coexistence agreement or license from the owner of the conflicting mark.
• Seeking to cancel the registration for a conflicting mark that is no longer in use on the basis of abandonment.

MISTAKE #5: ASSUMING THE “LITTLE GUY” CAN BE IGNORED

Another common mistake is ignoring potentially conflicting marks owned by small companies or individuals. Small companies and individuals may be particularly aggressive in defending their rights as the mark may be critical to their business. A small trademark owner can sometimes successfully claim reverse confusion. Reverse confusion occurs when a larger, more powerful junior user saturates the market and causes consumers to believe, mistakenly, that a smaller, but senior, user’s goods or services originate with or are connected with the junior user (see, for example, Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 474 (3d Cir. 1994)).

An injunction, or even the threat of an injunction, can cause substantial harm to a company that is about to launch a new product or service. A small trademark owner may be able to exert tremendous leverage merely by filing a lawsuit seeking injunctive relief. If the launch is particularly important, that company may be willing to pay a small trademark owner a significant payment to retain the ability to use the mark. If a company addresses a potentially conflicting mark owned by a small trademark owner during the trademark search and clearance process, it may be able to negotiate a small (or no) monetary payment because the small party has less leverage than if launch was already underway. Even if an arrangement cannot be reached , the costs of switching to a different mark are substantially less at an early stage than after a product or service launch, at which time:

• Inventory and other materials may need to be destroyed.
• Customer goodwill may be damaged by a name change.

MISTAKE #6: NOT SEARCHING A SEEMINGLY DESCRIPTIVE TERM

A non-trademark specialist may assume that a term with perceived descriptive qualities does not warrant a trademark search because:

• No third parties could own trademark rights in the term.
• The company would have a fair use defense to any third-party claim.

A descriptive term generally is not entitled to trademark protection because it cannot identify and distinguish a single source of origin. However, it is a mistake to assume that it is not necessary to search perceived descriptive terms. This is because:

• Secondary meaning may exist. A descriptive term may be protectable if it has acquired distinctiveness (secondary meaning) through use and promotion over time.
• Some subjectivity is involved in determining whether a mark is descriptive. Therefore the USPTO may have granted a registration on the Principal Register for a seemingly descriptive mark, affording it a presumption of validity. These marks may become incontestable if certain requirements are met.

The well-known case of Sands, Taylor & Wood v. Quaker Oats Co. shows the risks of not searching or properly clearing a seemingly descriptive mark (978 F.2d 947 (7th Cir. 1992)). The case involved a lawsuit by a small company that owned trademark registrations for the mark THIRST-AID against Quaker Oats after Quaker adopted the slogan “GATORADE IS THIRST AID” in an advertising campaign. Before the campaign was launched, it was reviewed by Quaker’s in-house counsel who concluded that the use of “Thirst Aid” was descriptive and a search was not required. After the launch of the campaign and Quaker’s receipt of an objection by the owner of THIRST-AID, Quaker’s outside counsel advised that Quaker’s proposed use was not infringing because Quaker was using “Thirst Aid” descriptively rather than as a trademark. Quaker continued with the ad campaign and ended up embroiled in a lengthy and expensive trademark litigation.

If you have questions about trademark law or would like to learn more about properly registering and protecting your new or existing brand, please contact our office.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Prior results do not guarantee a similar outcome.

Data Source: PLC

Photo Source: "USPTO@Alexandria" by cytech is licensed under CC BY 2.0